The stock market bubble debate never really goes away. It just gets quieter when indexes stop ripping higher. With the S&P 500 hovering near record levels and momentum cooling, one research firm decided to revisit the question using a very specific yardstick. Their conclusion: by at least one academic definition, parts of the chip trade are flashing bubble signals.
Analysts at Ned Davis Research leaned on a framework developed by Harvard economist Robin Greenwood, who studied how bubbles tend to form and burst. His research points to three recurring ingredients: unusually large price gains, rising volatility, and increased share issuance. Stocks that check enough of those boxes have historically gone on to underperform or crash.
When Ned Davis applied that rubric to individual S&P 500 stocks, a familiar set of names popped up.
What qualifies as a “bubble” here
Greenwood’s work was originally designed to spot bubbles at the industry level, not single stocks. Ned Davis borrowed the concept anyway and used it as an objective screen for extreme price behavior.
As of October 30, 2025, the firm found that 29 companies, about 5.8 percent of the S&P 500, met the bubble criteria. That group represents roughly 18 percent of the index’s total market capitalization. For context, during the peak of the dot-com era in 2000, about 9.2 percent of S&P 500 companies qualified.
In other words, today’s market looks stretched, but not dot-com stretched.
AI and semis dominate the list
The composition of the list is what really stands out. According to Ned Davis, 18 of the 29 companies that triggered the bubble screen are tied to artificial intelligence. Semiconductor stocks are especially concentrated.
Retail favorites like Palantir $PLTR ( ▲ 4.41% ) , Nvidia $NVDA ( ▲ 1.9% ) , and Broadcom $AVGO ( ▲ 0.63% ) were among the names flagged. Interestingly, Nvidia was the only member of the so-called Magnificent Seven to meet the criteria, underscoring just how much of the froth appears centered in chips rather than Big Tech broadly.
That concentration matters. It suggests the current excess, if there is one, is narrower and more thematic than the broad tech mania of past cycles.
Bubble signals are not sell signals
Ned Davis was careful to add an important caveat. Identifying bubble-like conditions does not tell you when prices will fall. Stocks can remain expensive, volatile, and euphoric far longer than skeptics expect.
Still, the firm’s takeaway was blunt. If the market is experiencing a bubble today, it is being driven primarily by semiconductors, with Nvidia at the center of the storm.
For investors, that does not necessarily mean run for the exits. But it does suggest that the chip trade is no longer just about growth. It is also about expectations, positioning, and how much optimism is already priced in.